Global Food, Fertilizer Prices Continue to Fall, But Local Volatility Remains

The FAO Food Price Index continued to decline in March, dropping by 2.1 percent from the previous month. The Index has fallen by almost 21 percent since March 2022.

The Cereal Price Index fell by 5.6 percent to reach 31.6 percent below its March 2022 level. Global wheat prices declined by 7.1 percent due to strong supplies and competition, as well as the extension of the Black Sea Grain Initiative. Maize prices fell by 4.6 percent due to good harvests in South America, including an expected record output in Brazil, and the Black Sea Grain Initiative’s extension. Rice prices declined the least but still fell by 3.2 percent due to seasonal supply in major exporting countries.

The Vegetable Oil Price Index fell by 3 percent in March to reach almost 48 percent below March 2022 levels. While global palm oil prices rose due to poor weather conditions and a temporary export restriction from Indonesia, this increase was offset by falling soy, rapeseed, and sunflower oil prices.

The Dairy Price Index also declined in March by a little over 1 percent. The Meat Price and Sugar Price Indices, on the other hand, increased in March. Sugar prices in particular experienced a significant increase, reaching its highest level seen since October 2016.

The latest AMIS Market Monitor also highlights the extension of the Black Sea Grain Initiative as an important contributing factor to falling grain and oilseed prices. However, the report also emphasizes that the current extension is set to expire at the end of May and that further extensions will require more negotiation. Furthermore, AMIS cautions that many countries, particularly net food-importing countries, continue to see high food prices and food price volatility, with food price inflation remaining a concern for poor populations.

Wheat production expectations for 2022 were raised March, with production now forecast to be 2.4 percent higher than 2021 levels. Global wheat utilization forecasts rose slightly due to increased feed use in China. Trade forecasts also increased due to higher Chinese demand; global wheat trade for 2022-2023 is now expected to be 1.9 percent higher than 2021-2022 levels. Global wheat ending stocks are expected to be 5.3 percent above opening levels; this increase reflects upward revisions in March from Australia, the EU, and Russia.

Global maize production forecasts for 2022 also increased slightly, but overall production is still expected to be nearly 4.5 percent below 2021 levels. Utilization expectations fell based on lower feed use in the EU. Global maize trade for 2022-2023 is forecast to be 3 percent lower than 2021-2022 levels due to smaller exports from Argentina and the U.S. Global maize ending stocks were forecast up in March; even with this increase, however, ending stocks are still expected to be nearly 7 percent lower than opening levels.

Rice production for 2022 was forecast slightly lower in March, while utilization forecasts remained largely unchanged. Rice trade expectations for 2022-2023 rose slightly due to expected increased imports from Indonesia. Global rice ending stock forecasts fell slightly in March.

Soybean production forecasts for 2022 fell in March due to drought-driven reductions in Argentina’s harvest, as well as lower harvests in Brazil and Uruguay. Utilization forecasts also fell as a result of lower crushing forecasts in several major producers. Soybean trade expectations increased slightly, while global soybean ending stocks fell due to reduced forecasts in South America.

Fertilizer and natural gas prices also continued to fall in March, due to a combination of slowing demand and easing of supply constraints. Ammonia and urea prices fell most due to abundant supplies; AMIS also reports that many buyers anticipate further price declines and are delaying further purchases. DAP prices also fell, but this decline was tempered by Chinese export restrictions. Similarly, potash prices fell somewhat due to adequate supplies but were hampered due to limited Belarussian exports.